Gold at the crossroads - Assessment of the supply chains of gold produced in Burkina Faso, Mali and Niger - OECD Guidelines for Multinational ...
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Gold at the crossroads Assessment of the supply chains of gold produced in Burkina Faso, Mali and Niger
The Organisation for Economic Co-operation and Development (OECD)
The OECD is a unique forum where governments work together to address the economic, social and
environmental challenges of globalisation. The OECD is also at the forefront of efforts to understand and to help
governments respond to new developments and concerns, such as corporate governance, the information
economy and the challenges of an ageing population. The Organisation provides a setting where governments
can compare policy experiences, seek answers to common problems, identify good practice and work to co-
ordinate domestic and international policies.
The OECD Due Diligence Guidance
The OECD Due Diligence Guidance for Responsible Supply Chains of Minerals from Conflict-Affected and High-
Risk Areas (hereinafter “the OECD Guidance”) provides step-by-step recommendations endorsed by
governments for global responsible supply chains of minerals in order for companies to respect human rights
and avoid contributing to conflict through their mineral or metal purchasing decisions and practices. The OECD
Guidance may be used by any company potentially sourcing minerals or metals from conflict-affected and high-
risk areas, and is intended to cultivate transparent, conflict-free supply chains and sustainable corporate
engagement in the minerals sector. The OECD Council adopted the Recommendation on the OECD Guidance on
25 May 2011, based on a proposal from the Development Assistance Committee (DAC) and the Investment
Committee. More information on the OECD’s work in the mining sector can be found at:
http://www.oecd.org/corporate/mne/mining.htm
The Liptako–Gourma Authority (LGA)
The LGA, created in December 1970, is an inter-governmental organisation, composed of Mali, Niger, and
Burkina Faso, whose principal mission is to encourage, implement and co-ordinate, at the level of the three
countries, any initiatives which will contribute to the region’s harmonious and integrated development. In recent
years, the Member countries of the LGA have made efforts to structure, organise and formalise artisanal and
small-scale mining, especially for gold.
Notes on this study
This study was prepared by Roberto Sollazzo based on research carried out in 2018 in the form of an analysis of
the literature available on the subject and interviews carried out in Burkina Faso, Niger, Mali and France with
key stakeholders in the production and trading of gold, and with representatives of the countries concerned and
international organisations. The overall aim of the study is to promote the responsibility of economic actors, and
the traceability and transparency of supply chains of gold ores produced in the LGA Member countries.
The Inter-Governmental Action Group against Money Laundering in West Africa (GIABA) reviewed and
provided input in the document. The GIABA is responsible for facilitating the adoption and implementation of
Anti-Money Laundering (AML) and Counter-Financing of Terrorism (CFT) in West Africa.
Co-funded by the European Union
© OECD 2018. This work is published under the responsibility of the Secretary-General of the OECD. The opinions
expressed and arguments employed herein do not necessarily reflect the official views of OECD member countries.
This document and any map included herein are without prejudice to the status of or sovereignty over any territory, to
the delimitation of international frontiers and boundaries and to the name of any territory, city or area.
Table of Contents
List of abbreviations ...................................................................................................................................................4
Foreword ....................................................................................................................................................................5
Executive summary ....................................................................................................................................................6
An overview of gold mining in the region .............................................................................................................. 10
Risks within the meaning of Annex II of the OECD Guidance ............................................................................... 21
Serious abuses associated with the extraction, transport or trade of minerals .............................................. 21
Direct or indirect support to non-state armed groups..................................................................................... 23
Direct support .................................................................................................................................................. 25
Direct control of gold mining sites ............................................................................................................... 25
Indirect support ................................................................................................................................................ 26
Abductions, ransoms and protection demands targeting industrial operators ........................................... 26
Extortion demands targeting ASM operators .............................................................................................. 27
Public or private security forces ....................................................................................................................... 27
Involvement of public or private security forces in mining ......................................................................... 27
Extortion targeting gold-mining operators .................................................................................................. 28
Bribery, fraudulent misrepresentation, money laundering and non-payment of tax ..................................... 28
Bribery, false declaration and non-payment of tax ..................................................................................... 28
Money laundering ........................................................................................................................................ 30
Conclusions and recommendations ....................................................................................................................... 33
1. Promote, circulate and implement the OECD Guidance ..................................................................... 33
2. Continue and strengthen action to support the formalisation of ASM .............................................. 37
3. Develop a regional approach to the ASM sector ................................................................................ 42
4. Incorporate considerations relating to the formalisation of ASM into regional security strategies 43
Summary of recommendations .............................................................................................................................. 45
References ............................................................................................................................................................... 51
Annexes ................................................................................................................................................................... 58
Annex 1: Notes on methodology...................................................................................................................... 58
Annex 2: Gold production areas in Burkina Faso, Niger and Mali .................................................................... 60
Annex 3: Cross-comparison of gold flows ........................................................................................................ 63
Annex 4: Area of operation of the main terrorist groups ................................................................................ 67
3
List of abbreviations
AFEMIN Malian Association of Women Miners (Mali)
ANEEMAS National Agency for the Supervision of Artisanal and Semi-mechanised Mining
(Burkina Faso)
AQIM Al Qaeda in the Islamic Maghreb
ARM Alliance for Responsible Mining
ASM Artisanal and Small-scale Mining
BCEAO Central Bank of West African States
BNAF National Gold Anti-Fraud Brigade (Burkina Faso)
CENTIF National Financial Intelligence Unit
CONAPEM National Corporation of Small-scale Miners (Burkina Faso)
CSO Civil Society Organisation(s)
EITI Extractive Industries Transparency Initiative
EU European Union
FATF Financial Action Task Force
FCFA Franc of the Financial Community in Africa
FEMIMA Malian Federation of Women Miners (Mali)
FNOM National Federation of Malian Gold Miners (Mali)
GSIM Jama'a Nusrat ul-Islam wa al-Muslimin / Group for the Support of Islam and Muslims
(terrorist group)
INSD National Institute of Statistics and Demography (Burkina Faso)
ISGS Islamic State in the Greater Sahara (terrorist group)
iTSCi ITRI Tin Supply Chain Initiative
LBMA London Bullion Market Association
LGA Liptako–Gourma Authority
MINUSMA United Nations Multidimensional Integrated Stabilization Mission in Mali (Mali)
OECD Organisation for Economic Co-operation and Development
ONASSIM National Office for the Security of Mining Sites (Burkina Faso)
SOPAMIN Société du Patrimoine des Mines du Niger (Niger)
SYNORARTRAB National syndicate of artisanal and traditional gold miners of Burkina (Burkina Faso)
UN United Nations
UNICEF United Nations Children's Fund
UNIDO United Nations Industrial Development Organization
WAEMU West African Economic and Monetary Union
WANEP West Africa Network for Peacebuilding
WGC World Gold Council
4
Foreword
The OECD Due Diligence Guidance for Responsible Supply Chains of Minerals from Conflict-Affected
and High-Risk Areas (hereinafter “the OECD Guidance”) provides step-by-step recommendations
endorsed by governments in order for companies to respect human rights and avoid contributing to
conflict through their mineral or metal purchasing decisions and practices.
The OECD Guidance is applicable to all the areas around the world where mineral resources are
produced and traded. Since the launch of the programme to implement the OECD Guidance in 2013,
most of the focus has been placed on Central Africa. Nevertheless, since 2015, activity has spread to
Latin America and, more recently, West Africa.
Since the start of 2016, the OECD has been working with the Liptako–Gourma Authority (LGA) to
advocate the implementation of the recommendations of the OECD Guidance within its three Member
countries (Burkina Faso, Mali, Niger). The LGA, created in December 1970, is an inter-governmental
organisation whose principal mission is to encourage, implement and co-ordinate, at the level of the
three countries, any initiatives which will contribute to the region’s harmonious and integrated
development. In recent years, the Member countries of the LGA have made efforts to structure,
organise and formalise artisanal and small-scale mining, especially for gold.
For the purpose of developing a regional action plan, the OECD, with the support of the LGA,
commissioned this assessment of the supply chains of gold produced in Burkina Faso, Mali and Niger.
The overall aim of the study is to promote the responsibility of economic actors, and the traceability
and transparency of supply chains of gold ores produced in the LGA Member countries.
This study examines the current state of the gold supply chains in the three LGA Member countries,
notably by mapping the actors involved (in production, trade and export) in both the private sector
(formal and informal) and the public sector. The study covers industrial production as well as artisanal
and small-scale mining and identifies the different risks associated with the gold sectors in the three
countries within the meaning of Annex II of the OECD Guidance. Given the climate of insecurity created
by the activity of terrorist groups in the Sahel, the study pays particular attention to any potential links
which may exist between the production and trade of gold in the region and the funding of the
activities of these groups, on the territory of the LGA Member countries and at the regional and
international level.
The study proposes a series of strategic recommendations for promoting the regional development of
responsible gold supply chains in line with the recommendation of the OECD Guidance, and for
encouraging due diligence in the Liptako-Gourma countries.
5
Executive summary
Artisanally-mined gold in the three countries could be equivalent to 50% of
industrial production
Gold production is the main driver of exports in Burkina Faso and Mali and accounts for a substantial
proportion of government income there. In contrast, the extractive sector in Niger is dominated by oil
production and uranium mining. The 12 industrial gold mines currently in operation in Burkina Faso
produced 45.5 tonnes of gold in 2017, while the nine industrial mines in Mali produced 49.6 tonnes.
In Niger, the Samira gold mine, the only one in the country, produces 1.5 tonnes of gold a year.
Altogether, industrial production of gold in the three countries thus amounted to 96.6 tonnes.
None of the three countries can provide an overall estimate of the amount of gold produced by
artisanal and small-scale mining (ASM). Because precise data is hard to obtain, such estimates vary
very widely according to the country and the person interviewed.
According to Burkina Faso’s National Institute of Statistics and Demography, the country’s 500
to 700 ASM sites produce 9.5 tonnes of gold a year. However, analysis of atmospheric mercury
emissions and the author’s own interviews suggest an amount of around 20-25 tonnes.
In Niger, ASM sites in the Tillabéri administrative region in the south-west of the country
produce around two tonnes of gold per year. Adding the gold produced since 2014 in the
Djado and Aïr regions north of Agadez gives a total of around 10 tonnes per year.
Mali, where some 300-350 sites are in operation, reports ASM production of around four
tonnes per year. However, Malian customs estimate that at least 20 tonnes of artisanally-
mined gold leave the country each year, mostly illicitly, via Bamako international airport. The
authorities in charge of the sector mention production of 30 to 50 tonnes, though they are
unable to support these estimates.
ASM production in the three countries as a whole could range between 15 and 85 tonnes per year,
with a likely estimate putting the figure at around 50 tonnes, which would represent more than 50%
of legally reported industrial production in 2017. At the average gold price in 2017i, this production
would have a market value of USD 2.02 billion. The vast majority is exported illicitly.
Recent estimates reckon that around 1.5 million people could be directly employed in ASM in Mali
(400,000), Niger (450,000) and Burkina Faso (200,000), with 6.1 million being at least partially
dependent on the sector (Hilson, 2016), out of an aggregate population in the three countries of nearly
60 million. On that basis, 10% of the population of the three countries concerned would be indirectly
linked to ASM.
i
USD 1257.09 per troy ounce (https://www.bullionvault.com/gold-news/gold-bullion-price-2017-123020171)
6
The risk of human rights violations as well as money-laundering and tax
evasion on a massive scale are significant features of ASM
Vulnerabilities in the sector include the risk of bribery, fraudulent misrepresentation, money
laundering and non-payment of tax as well as practices that violate human rights, such as child labour,
forced labour, prostitution and widespread sexual violence. There are estimated to be more than
100,000 children at ASM sites in Burkina Faso, Niger and Mali. However, most sources indicate that
children rarely work underground, their contribution being limited to related activities such as carrying
water and processing ore.
Another finding of the study is that the involvement of customary police in the oversight of informal
mining, especially in Mali and Burkina Faso, can lead to extortion and illicit control of mining and
trading. The involvement of government security forces was also noted, though to a lesser extent.
In one of its key conclusions, the study emphasises that ASM gold is very widely used as an alternative
currency to circumvent West African exchange-control regulations and the requirement to repatriate
foreign currency. There are no controls relating to the origin of funds in connection with the activity
of collectors and dealers in the three countries and operators are not subject to any background
character checks. The recommendations of the Financial Action Task Force (FATF) on due diligence
applied to dealers in precious metals, which include a requirement to keep and conserve up-to-date
records of transactions, do not feature in the laws of the three countries studied.
A recent upsurge in terrorist interference in gold production and dealing
A number of non-state armed groups operate in the three countries studied, especially within the
region bordered by the Mopti-Niamey line and the Niger River loop. A series of reports in recent
months indicate an increase in incidents linked to the activity of these groups around both ASM sites
and industrial gold mines in the region.
In Burkina Faso, the Ansarul Islam terrorist group is applying constant pressure in the Sahel region,
where a number of industrial mines are located. To give one example, on 24 September 2018 three
employees of the Inata gold mine, near the Malian frontier, were abducted by a group of men strongly
suspected by the authorities to be linked to terrorist organisations based in Mali. Ansarul Islam is
suspected of being the perpetrator of several attacks and raids on ASM sites in the Soum region. In
Niger, Islamic State in the Greater Sahara has claimed several attacks in the Tera/Tillabéri region,
where the Samira industrial mine and the majority of active ASM sites are located. Transnational
criminal gangs, mostly made up of Libyans or Chadians, operate in Djado and Aïr, a vast and difficult-
to-control desert region where most ASM gold is mined. In Mali, industrial mining and ASM are located
in the south-west, outside the direct sphere of action of non-state armed groups. However, several
reports indicate that ASM activities are starting up around Kidal and Tessalit, in areas where the
presence of groups affiliated to Jama’a ul-Islam is attested.
7
Although the study has identified a number of instances of interference in gold mining and trading by
non-state/terrorist armed groups, its scale still needs to be determined more precisely. Investigations
on the ground are needed to find out the extent to which mining operations in these areas are likely
to contribute to the financing of non-state armed groups. Such investigations could be carried out
with the help of the intelligence services and regional and international peacekeeping missions
currently deployed in the region.
ASM is an opportunity for development and stabilisation in areas of
production
In the three countries, the study has highlighted ASM’s contribution to local economic development,
especially in isolated rural areas. More unusually, it has identified the opportunities brought by ASM
to northern Niger in particular, a once economically enclaved region where productive activity was
hampered by a deteriorating security situation. The unexpected expansion of ASM and activities to
support production clearly seems to have offered local people alternatives to unemployment, banditry
or rebellion against the government (Grégoire and Gagnol, 2017).
Generally speaking, since around 2010, West African states seem to have taken a pragmatic view of
artisanal and small-scale gold mining, previously regarded as creating problems and holding back the
development of the mining industry. Attempts to regulate and formalise artisanal mining and the
trade in artisanal gold are under way in the three countries studied.
Overview of recommendations
The study proposes four sets of recommendations to forestall the risks identified while it was being
carried out and to maximise the opportunities for economic and social development that ASM
represents.
1. Continue to promote, circulate and implement the OECD Guidance recommendations.
National and international public institutions and the private sector can play a key role in promoting
initiatives on transparency, accountability and traceability in mining production at regional level. Some
initiatives are already being rolled out and would benefit from greater support from all stakeholders.
2. Continue and strengthen national and regional action to formalise and legalise ASM.
As the study notes, many programmes to support the legalisation and formalisation of ASM are under
way in the three countries. They should be encouraged and harmonised as broadly as possible. The
initiatives should be carried out in consultation with miners and should involve national and
international private sector players to ensure that they are sustainable and financially profitable. It is
also crucial that capacity-building and empowerment initiatives at production sites should be backed
up by measures to regulate the financing of operations to extract, purchase and export gold.
8In addition, in order to improve recognition of the economic and social impact of ASM at the regional
level, steps to gather reliable information on the size and extent of the sector should be encouraged
and supported. That information could feed into the framing of public policy at the national and
regional level and for the development of international development assistance programmes.
3. Develop a regional approach to the management of gold mineral resources within the
framework of existing African initiatives and in liaison with the relevant international
programmes.
Measures to harmonise export taxes at a level that encourages legal trading should be strongly
encouraged. Discussions should take place with financial-sector players at the regional level to put
forward constructive responses to the limitations of a banking system that incites players from outside
the mining sector to subsidise illicit and informal gold production in order to meet the challenges of
financing their own operations.
4. Incorporate ideas and initiatives to promote the formalisation of ASM into counter-terrorism
and peace-building strategies in the Sahel region.
As the partners in the Sahel Alliance launched on 13 July 2017 rightly point out, efforts to ensure the
region’s security will be fruitless if they are not backed up by a long-term commitment to
development. Given the large numbers involved in ASM and how widespread the activity is in the
three countries, the initiatives taken by the international community to provide long-term responses
to the challenges posed by persistent poverty in the Sahel region could also usefully incorporate
measures focusing on support for the formalisation of ASM.
9An overview of gold mining in the region
The industrial and artisanal/small-scale mining sector, especially gold production and trading,
represents a significant slice of the national economy in the three countries studied. According to the
most recent conciliation reports from the Extractive Industries Transparency Initiative (EITI) published
in 2017 and 2016:
in Burkina Faso, gold mining accounted for 95% of total revenues generated by the mining
sector in 2015, representing 138,714 million FCFA (€211,468,130)ii;
in Mali, gold mining accounted for 90% of total revenues generated by the mining industry,
representing 180,861 million FCFA (€275,720,817);
in Niger, where the mining sector is dominated by uranium (only 706 kg of gold were exported
in 2014, including 64 kg of artisanal gold), gold mining accounted for 30% of total revenues
generated by the mining sector (with oil accounting for the remainder), representing 162,044
million FCFA (€247,034,485), though the value of gold exports (2.9% of the total) is negligible
in comparison with uranium (51.7%).
Extractive industriesiii in the three countries account for 62-65% of total exports (83.43% in Niger),
16-17% of government revenue (22.6% in Niger) and 6-7% of GDP (10% in Niger), but only 0.22% of local
employment.
Gold-mining regions, types of mine and production
Burkina Faso
Industrial gold mining in Burkina Faso is concentrated in the Sahel (Essakane and Inata mines), the
Centre-North (Bissa and Taparko mines) and the Mouhoun Loop (Semafo mine). The country also has
500 to 700 officially listed ASM sites nationwide, though according to the National Institute for
Statistics and Demography the south-west and north of the country account for 75% of ASM
production (INSD, 2017). ASM has been practised in Burkina since the 1970s and 80s and led to the
discovery in 1984-85 of the Essakane mine in Oudalan province, operated industrially since the 1990s.
Since the 2010s, Burkinabe prospectors have learnt how to use cyanide to treat mineralised scrap,
which had previously been bought and processed by specialist companies. This considerably increased
the productivity of ASM. To give an example, the concentration of gold in tailings not processed by
ASM operators has fallen from 10-15 grams of gold per cubic metre to 4-6 grams (interviews with
specialist processors of tailings in Burkina Faso, 2018). Burkinabe prospectors also visit sites in Mali
and Niger to carry out cyanide processing, albeit not without causing accidents and incidents that
sometimes kill livestock and poison groundwater.
ii
1 euro = 655.957 FCFA (fixed exchange rate).
iii
Burkina Faso and Mali are compliant members of the Extractive Industries Transparency Initiative (EITI). Niger
was suspended from EITI in 2017 due to insufficient progress in implementing reforms in the sector and
subsequently announced its withdrawal (RFI, 2017). The EITI reports for Burkina Faso and Mali also include the
contribution of artisanal and small-scale mining. The EITI report for Niger excludes ASM on account of its
informal structure.
10Several estimates have been made in recent years of ASM’s real annual contribution to gold
production in Burkina Faso, ranging from 9.5 tonnes (INSD, 2017) to 30 tonnes (Assemblée Nationale,
2016). The prospectors and dealers interviewed estimate annual artisanal production at around 15 to
20 tonnes, while calculations based on atmospheric mercury emissions (AMAP/UNEP, 2013; COWI,
2016) estimate production at 20-25 tonnes a year. However, dealers’ officially recorded exports of
artisanal gold in 2017 amounted to only 236 kg (interview with Aneemas, 2018).
According to several sources, 1-1.2 million people are directly employed in the sector (including
around 300,000 diggers), representing 10% of the labour force (interviews with Conapem,
Synorartrab, industrial producers, 2018), whereas the INSD study puts their number at just 140,000
(INSD, 2017). Recorded industrial production in 2017 amounted to 45.5 tonnes and the mines and
quarries minister, Idani Oumarou, estimated that the country’s industrial output of gold could rise to
55 tonnes in 2018 (Reuters, 2018). Since 2009, gold has replaced cotton as Burkina Faso’s leading
export commodity.
Niger
Most gold in Niger is produced in Liptako, in the Tillabéri administrative region in the south-west,
where the country’s only industrial mine, the Samira mine, is located. Gold prospection started in 1984
as a means of generating income after a particularly severe drought and is currently practised officially
at 69 sites in the region. The government sought to regulate the activity in the 1990s by setting up
multidisciplinary teams drawn from the mines administration, the health service and the security
forces. This official oversight of ASM sites in Liptako lasted until 2016, when it was suddenly halted,
partly due to a lack of financial resources but also because the security forces were needed to support
anti-terrorist operations (interview with the Tillabéri regional director of mines, 2018).
Mali
Gold production in Mali is concentrated in the regions of Kayes (Sadiola, Tabakoto, Yatela, Loulo and
Kodieran mines), Koulikoro and Sikasso (Syama, Kalana and Morila mines) in the south-west of the
country, near the borders with Senegal, Guinea and Côte d’Ivoire. Most ASM sites are also located in
these regions, the most densely populated in the country (Grégoire, 2015). According to the National
Geology and Mines Directorate, more than half the identified gold reserves (approx. 1,000 tonnes)
have already been extracted (interview with the National Geology and Mines Directorate, 2018).
In addition to these two regions, semi-industrial mines operate in the Sikasso region and dredge placer
mining has spread on the Niger River and the Falémé and Bagoué Rivers, at the border with Senegal
and Côte d’Ivoire respectively.
Gold has been extracted in Mali using traditional methods since the 11th century. The activity has been
modernised since the 2000s, with the use of metal detectors and motorised equipment (mainly
hydraulic pumps and mechanical crushers and grinders). Statistics on artisanal gold in Mali contained
in the most recent EITI report indicate production of 4 tonnes from around 300 sites (EITI, 2017),
whereas customs authorities estimate that 20 tonnes of artisanal gold were exported, mostly illicitly,
via Bamako international airport in 2017 (interview with Malian Customs, 2018; Reuters, 2017).
Technicians from the mines ministry, the Mali chamber of mines and the ASM federation estimate
artisanal production at 30-50 tonnes a year, without being able to produce evidence to support their
estimates (interviews, 2018; Agence Ecofin, 2018). Industrial production amounted to 49.6 tonnes in
2017 (Agence Ecofin, 2018).
11Box 1: ASM sites in the Djado and Aïr region
A chance discovery of gold in 2014 in the Djado and Aïr region in the north of the country attracted a rush
of several thousand prospectors, most of them Nigeriens from the Toubou ethnic group but also including
foreigners from Libya, Chad and Sudan. Although prospection in Niger is traditionally seasonal and stops
during the rainy season to ensure the survival of agriculture, the prospectors who have settled in the north
are focused solely on gold extraction, including with mechanical methods (Grégoire and Gagnol, 2017).
Corruption, banditry and the security threat associated with the uncontrolled rush caused the Nigerien
authorities to order the closure of the Djado sites towards the end of 2016 (interview with Dempec, 2018).
Several thousand miners are currently operating another site at Tchibarakaten, at the Algerian border.
Unlike Djado, it is tolerated by the Nigerien authorities, who acknowledge the difficulty of controlling such
a remote area and consider that prospection there is more a factor of socio-economic stability than a
security concern (interviews with Sopamin and Niger National Police, 2018; Grégoire and Gagnol, 2017).
Sites in Aïr, also discovered in 2014, are still active. It is difficult to estimate the production of these hard-
to-reach ASM sites in the north of the country, so we will accept the estimate made by Grégoire and Gagnol
(2017) of 10 tonnes a year.
The Nigerien authorities estimate the population of the northern ASM sites at around 70,000 people
(interview with the Criminal Police, 2018). The economic boom brought by gold prospection has enabled
several municipalities in the Agadez and Arlit region to invest in infrastructure. At Agadez, several hotels
which had closed because of the economic stagnation caused by insecurity in the years after 2010 have now
reopened (hotel managers, 2018). Sources in the security services consider that the economic revival that
the region is experiencing as a result of gold mining makes the people more resistant to the urge to revolt
against the government (armed rebellions took place in 1991-1995 and 2006-2009) and the temptation to
join the terrorist groups active in the area (interviews with the Criminal Police and Interpol, 2018). As an
example the sources cite the plan for a Toubou rebellion in 2016, said to have been postponed in order not
to destabilise the economy in the Agadez region.
Mining laws in the three countries – focus on ASM
The dominant legislative framework in West Africa has greatly favoured the establishment of
industrial mines and has tended to marginalise ASM, often seen by lawmakers as causing problems
and holding back the development of the mining industryiv. Since the 2010s, however, governments
have gradually taken a more constructive approach to ASM, reflected in attempts to regulate and
formalise the activity.
Burkina Faso
The marketing of gold produced artisanally in Burkina Faso is regulated by Act 028-2017 and its
implementing decree no. 2017-433 of 9 June 2017, which inter alia creates the National Gold Anti-
Fraud Brigade (BNAF), and by the decree of 23 January 2017, which sets the tax on gold exports via
Aneemas at 200,000 FCFA (€305) per kilo. These texts state that any individual wishing to pursue an
activity in artisanal or semi-mechanised mining or the processing of mining waste, tailings or spoil
must be authorised to do so by means of a card issued by Aneemas identifying them as an artisan
miner of gold and other precious materials. The texts grant duly authorised legal entities under
Burkinabe law the right on the entire national territory to buy, own, process, transport and sell in
Burkina Faso and to export gold and other precious materials produced by artisanal and semi-
mechanised means.
iv
The AMLA website https://www.a-mla.org/ lists all the prevailing mining legislation on the African continent.
12Niger
In Niger, the 2017 Artisanal Mining Act introduced new mining rights relating to artisanal and semi-
mechanised mining and the processing of tailings and spoil. The reform was the result of the Council
of Ministers’ acknowledgment of the failure of the government policies implemented hithertov.
Artisan miners must now apply for an individual card in order to operate. Local buyers must also be
identified by a “gold-buying intermediary” card, while dealers need a licence to market substances
derived from artisanal mining (statutes, 2017). One aim of the reform is to ensure better control over
the production and marketing of artisanal gold, especially following recent discoveries of gold in the
north of the country. The new law also reduces the export tax to 60,000 FCFA per kilo for consignments
of more than 50 kg.
Mali
In Mali, the 2012 mining code recognises traditional and mechanised artisanal mining. It also confers
the management of mining resources on local authorities, albeit without devolving the necessary
powers and resources for their operation and supervision (Keita, 2017). For example, local authorities
are supposed to issue permits for non-mechanised artisanal mining up to a depth of 15 metres but in
fact most Malian prospectors do not apply for them because the authorities do not effectively control
the territory (interview with FNOM, 2018). In addition, the local government code makes no mention
at all of the regulation of prospection (Keita, 2017). The ministry of mines has given FNOM the task of
issuing site access cards, valid for one year at a cost of 100,000 FCFA, but the decision has been
challenged by the chamber of mines, which issues its own ID cards at sites. To add to the confusion
over interpretation of the law, municipalities also claim to issue their own site access cards (interviews
with FNOM, chamber of mines, decentralisation ministry, EITI Mail, 2018).
In compliance with the directive regulating foreign exchange within the West African Economic and
Monetary Union (WAEMU), any person holding mining rights in Burkina Faso, Mali or Niger is required
to repatriate the proceeds of the sale in another country of minerals produced in those countries.
Description and organisation of players
The OECD Due Diligence Guidance applies to all the players in the minerals supply chain who are likely
to supply or use minerals from conflict-affected or high-risk areas (OECD, 2016). This study focuses on
upstream players and operations – production, internal trading, exports and (in Mali only) refining –
in the three countries that are its subject.
v
“Despite the efforts made to organise artisanal mining since the 1980s, the results with regard to control of
production, marketing and government revenue have been mixed” (Council of Ministers communiqué of 30 June
2017).
13Box 2: Mining rights and mine operators in Burkina Faso, Mali and Niger
Burkina Faso
Burkina Faso has issued 701 gold prospection permits, 99 of which were valid on 1 March 2018. Industrial
mine operators (the Canadian firms Iamgold, Semafo, Endeavour and Avocet and the Russian firm Nordgold)
hold 43 permits altogether. The Australian companies Ampella, Birimian and Perseus Gold hold 48 permits,
followed by Burkinabé operators. The French firm C.S.O. Sarl and the American firm ACC International
Holdings hold 6 and 9 permits respectively (Bumigeb database, 2018).
Mali
There are 528 currently valid permits in Mali. The South African firm Mali GoldFields holds 8 permits in
Yanfolila and 11 in Kanagaré. Endeavour, Iamgold and Rand Gold are actively involved in gold prospection,
along with the British company Cora Gold, which has 15 permits. The Australian firms Birimian and Oklo
each have 6 permits (mining registry, 2018).
Niger
Turquie Afrique Développement and the Nigerien firm Jabalpur Gold Resources Sarl hold prospecting
permits in the Tillabéri region, named “Tiambi” and “Gourmande” respectively (Niger Inter, 2017).
Production: industrial and artisanal and small-scale mining
Industrial mining is well developed in Burkina Faso and Mali, where 9 and 12 mines respectively are in
operation. The gold-mining industry is still in its infancy in Niger, where there is only one industrial
mine, Samira, operated by Société Minière du Liptako.
The EITI reports for the three countries studied give a detailed overview of industrial gold production
but contain insufficient information about ASM; that is why this study focuses on the ASM sector in
particular. In all three countries, modern ASM using mechanical equipment (hydraulic pumps, grinders
and crushers) and chemicals (mercury and cyanide), and sometimes explosives, has replaced
traditional methods, limited to the mining of outcropping placer deposits. Driven by the need to
finance the growing costs of ASM, elaborate forms of organisation have emerged at over half the sites
in the three countries, where individual prospectors had previously worked for themselves.
The key person in this new form of organisation, which appears in all three countries, is known as the
“pit owner”, who provides food and basic care for teams of diggers, each generally having four
members. However, being the pit owner does not automatically mean having mining rights or a
permit, given that over half the ASM sites in the three countries remain informal.
When a new shaft is opened, the owners call on temporary workers (called “djobs” in Niger), paid in a
certain number of sacks out of the total produced, or “pit people” to remove the bulk of the earth
before reaching the gold vein. The teams of diggers then go to work, filling up to 12 or 13 70-kilo sacks
with ore, then make way for another team, if the pit owner can finance more than one.
14The pit owner gets half the sacks, generally keeping back one for the owner of the land on which the
site is located and one for the site police, though these handouts remain informal and are based on
tacit accords. The other half are divided between the members of the digging teams. Thus, out of a
production of, say, 12 sacks of ore, the village or the owner of the land where the mine is located will
get one sack, as will the security staff, the pit owner will keep five and the other five will be divided
between the members of the team.
The sacks are then taken to the processing areas, which are often situated in the immediate vicinity
of the shafts or in the miners’ dwellings, despite legislation that requires a clear separation between
shafts, processing areas and dwellings. Processing costs – about 6,000 CFCA (€9) per sack – are high
and surprisingly uniform in the three countries. Miners are often affiliated to federations or trade
unions, though these organisations are unable to secure their members a fairer share of revenues
than that offered by the predominant model of prefinancing by a sponsor. The only plan to create a
miners’ cooperative to modernise production and pool operating and processing costs observed in
the course of this study is at Gombeledougou in Burkina Faso, supported by the Alliance for
Responsible Mining (ARM, 2016).
Table 1: How the profits of an ASM site are shared
Team Team cost Processing Sacks Grams Grams Price/gram
members of living costs per per week of gold per week on-site
(FCFA sack (FCFA) per sack (FCFA)
per week)
4 25-50,000 6,000 12 Approx. 2 Approx. 25 18-20,000
Sacks for Sacks for Share out of Net profit for the Net profit for the
“security” traditional remaining sacks ownervi diggers
authorities (owner / team) (FCFA/week) (FCFA/week)
1 1 5/5 125-145,000 150-170,000
Miners operate sites from a gold content of barely 1.5 g per sack of ore and produce on average five
per day, six days a week (80% of them do not work on Friday). Mining campaigns last for 8 to 9 months
and are suspended during the rainy season so that miners can return to work the fields, without which
there would be food shortages.
About 60% of pit owners are financed in turn by the buyers or dealers (comptoirs) who employ them.
In this case, each link in the supply chain generates a profit of around 50 FCFA (€0.075) per gram of
gold bought, or 0.3% of the final price, on which the financers take a margin of around 2.5-3%. In this
model, the distribution of the profit margin is therefore clearly biased in favour of the downstream
financers, to the detriment of the upstream producers.
vi
The calculation of net profit includes the team’s living costs mentioned in the first line of the table. The diggers’
profit is shared between all the team members.
15Box 3: Dredge mining
Malian law allows dredge mining for gold in watercourses. The mining registry lists 60 permits for dredge
mining gold (on-line consultation, 2018i), mostly in the Kangaba Circle upstream of the Niger River. Riverside
communities allow dredging because the miners pay an annual fee of 125,000 FCFA to the customary
authorities and 25,000 FCFA to the municipality, but there are estimated to be at least four times as many
illicit sites as licensed dredging operations (interview with former Director of Geology, 2018).
Most dredgers are of the traditional type, with a diver to guide the suction tube in the water, and are
generally operated by Malians or nationals of other countries in the sub-region. As a result of rising demand
for this type of equipment in recent years, “made in Bamako” dredgers are starting to be made locally, using
engines from Mercedes cars, which are very common in Mali (interview with a traditional dredger operator
in Bamako, 2018). There are also some modern bucket-chain dredgers, most of which belong to Chinese or
Indian operators (interviews with FNOM, Scomine and a dredger operator, 2018). An estimated 400
dredgers are currently in operation on the Falémé River, a tributary of the Senegal River, which marks the
border between Senegal and Mali, and 150 on the Bagoué, a relatively small watercourse at the frontier
with Côte d’Ivoire.
Dredging has a very adverse impact on the Niger and Senegal river basins because it silts up the river beds
and reduces the flow of the two rivers, especially in downstream countries like Niger. On 2 March 2018, the
National Water Commission (CNE) compared the current situation of the Niger and Senegal Rivers with that
of 1984, the year of the worst drought ever experienced in Mali, and called for a ban on dredge mining for
gold (Maliactu.net, 2018)i.
Trading: financers and buyers
Buyers (known as “collectors”) in Burkina Faso and Niger buy the gold crushed by miners on-site,
taking into account the weight loss during smelting due to impurities. For that reason, gold at the
mining site is measured not in grams but in units other than those of the international system,
especially the “engros”, an old 25-FCFA coin which corresponds to a measure of 6 grams (but in fact
weighs 8). Likewise, measures of fractions of a gram are used, such as the “allumette” (matchstick),
sold at the price of a tenth of a gram but which in fact corresponds to an eighth of a gram. On average,
therefore, collectors pay miners a price 20% less than the actual quantity bought, even though the
weight loss on smelting is no more than 4-7%.
This difference explains why the prices asked by miners on-site are often considerably higher than the
market price (“fixing”vii ), given that an “engros” sold for 150,000 FCFA (€228.60), at a theoretical price
of 25,000 FCFA (€38) per gram, corresponds in fact to a value of 18,750 FCFA (€28.50) per gram
(interviews with traders in the sub-region, 2018).
In Mali, gold is bought at mining sites in grams, but here again, through negotiation or rigged weighing-
scales, collectors manage to pay 20% less than the regular price for the quantity they actually buy
(interviews with FNOM and dealers, 2018). In the three countries studied, collectors on-site therefore
rig prices by buying on average 20% more gold than they pay the miners for.
vii
The London Gold Fixing Price is the price of a gram of 24-carat gold, published twice a day (at 10:30 am and
3:00 pm London time) by the London Bullion Market Association (LBMA), available on the website
http://www.lbma.org.uk/precious-metal-prices.
16Dealers: refiners and exporters
Powdered gold is smelted by dealers in Ouagadougou, Niamey and Bamako. In Burkina Faso and Niger,
the dealers determine the price of gold according to the value of a carat at the international fixing
price. The fixing price on 5 March 2018 of 22,800 FCFA (€34.75) per gram of 24-carat gold (99.99%
pure) corresponds to 950 FCFA per carat per gram (950 FCFA x 24k = 22,800 FCFA). The price of a gram
of 92% pure gold (22k, the average quality extracted by artisanal miners in the three countries studied)
is thus 20,900 FCFA (€31.90) per gram. The dealers generally buy gold for around 20,350 FCFA (€31)
per gram, but some may pay as much as 20,680 FCFA (€31.50), generating a gain of 550,000 FCFA
(€850) per kilo of gold exported (2.5% profit), which may fall to 220,000 FCFA (€335).
Dealers’ margins in Mali range from 530,000 to 640,000 CFCA (€800-975) per kilo exported,
representing a profit of nearly 3%.
In Niger, unlike in Burkina Faso or Mali, there are no professional gold dealers. As in the other two
countries, the activity is carried on by merchants of various kinds, who often also provide currency
exchange servicesviii. Nonetheless, existing gold supply chains in Niger are well-established at
production sites and take up most of the available artisanal gold. To give an example, Sopamin, the
public company created to manage the state’s participations in the mining sector, is trying to compete
with these gold-buying networks but has not been able to find enough people willing to sell to it
(interview with Sopamin, 2018).
In Burkina Faso, the tax on gold exports is 450,000 FCFA (€686) per kilo, and 200,000 FCFA (€305) for
gold exported via Aneemas. In Niger, the export tax is 120,000 FCFA (€183) per kilo, or 60,000 FCFA
(€92) for consignments of more than 50 kilos, but exporters must pay an additional customs duty of
350,000 FCFA (€533.50). In Mali, the tax on artisanal gold exports is 465,000 FCFA (€709) per kilo, with
an exemption for the first 500 grams of each export.
Table 2: Taxes on gold exports (FCFA per kilo)
Tax Exemptions Other taxes Total tax Dealers’ profit
(exemption) before tax
Burkina Faso 450,000 200,000 (via 25,000 475,000 550,000
Aneemas) (Bumigeb) (225,000)
Niger 120,000 60,000 for 350,000 470,000 550,000
exports of (customs) (410,000)
more than 50 kg
Mali 465,000 Exemption for 465,000 530 – 640,000
the first 500 (232,500 if a
grams of each single kilo is
export exported)
Togo 30,000
viii
On this point, a 2016 study notes that gold is also used as a means of payment in West Africa, enabling
economic agents to circumvent official banking and foreign-exchange channels (Alliance for Responsible Mining,
2016), Supply Chains of Artisanal Gold in West Africa, http://www.responsiblemines.org/wp-
content/uploads/2018/04/Publication-supply-chains-artisanal-gold-west-africa_-ENGL_-baja.pdf).
17On 27 October 2017, the Nigerien Council of Ministers signed an agreement with Afrior for the
installation and operation of a gold refining operation in the Niamey region, within a six-month period
and at a cost of 1 billion FCFA. The Council estimated the spinoff of the investment at 300 million FCFA
a year for the duration of the agreement, plus the hiring of 300 workers, mostly Nigerien (press
release, 2017).
Two gold refineries are in operation in Mali, that of the local operator Marena Gold Mali, with a
production capacity of 50 kg of raw gold per day, and the Kankou Moussa refinery (KMR), built and
operated since January 2016 by the Italian company Swiss Bullion Co (Africa Intelligence, 2017). The
Kankou Moussa refinery has a capacity of 100 kg per day and sources gold powder from three ASM
sites in Mali; it is working with the Italian precious metals shipper Ferrari in the medium term to target
the industrial production of small and medium-sized producers such as the mine operated by
Wassoul’Or (Africa Intelligence, 2016). The Kankou Moussa refinery is also working with the Malian
Federation of Female Artisanal Miners (Femima) to promote alternative methods to mercury for
amalgamating gold flakes (interview with Femima, 2018).
The refineries in Bamako currently continue to operate at chronic under-capacity (interviews with the
Mali chamber of mines, 2018). The Kankou Moussa refinery, for example, processes no more than 30
kg of raw gold per day (Africa Intelligence, 2016 and 2017).
Final destinations and transit countries
One way of estimating the production of artisanal gold not reported in the statistics, which is often
exported illicitly, is to compare the existing statistics (UN Comtrade, 2018; EITI reports, 2017, 2016)
for exports reported by producing countries and those for imports into destination or refining
countries. This simple check shows, for example, a striking difference of 67 tonnes of gold that the
United Arab Emirates reported importing from Mali in 2015 but that went unrecorded in the Malian
statistics. This difference may include both non-reported and illicitly exported national ASM
production and gold produced by other countries, also probably exported illicitly (Martin and Helbig
de Balzac, 2017). The difference in 2016 was only 27 tonnes, which seems to suggest that illicit trade
in gold from other countries had stopped passing through Maliix and that only domestically produced
artisanal gold continued to be exported. Two thirds of industrially produced gold is exported to
refiners in South Africa and a third to Switzerland.
Togo, despite having no gold mines, nevertheless exported 48.7 tonnes of gold between 2014 and
2016, mostly to the United Arab Emirates (24 tonnes over the period), Lebanon (15.8 tonnes) and
Switzerland (8.7 tonnes). Several reports (ARM, 2017; Guéniat and White, 2015) and interviews by the
author (in Ouagadougou and Niamey, 2018) highlight Togo’s role as a hub for the illicit trade in gold
from Burkina Faso, Niger and other countries of the sub-region, due to its low tax on gold exports (30-
45,000 FCFA per kilo compared with an average of 450,000 FCFA in the other countries).
ix
There is not at present any reliable explanation for the reduction in gold flows through Mali from 2016. A joint
mission of the World Bank and the International Monetary Fund in mid-December 2015 suggested that the Ebola
epidemic could have had an impact on the region’s economy, because the three countries all produce raw
materials (Le Monde, 2016, Comment Ebola a asphyxié l’économie); a slowdown in ASM in Guinea could also
have limited the supply of gold to the Malian market. The sudden increase in Mali’s export tax is another
plausible hypothesis.
18Following the publication in 2015 of a report by the Swiss NGO Berne Declaration (Guéniat and White,
2015), official statistics for gold imports by Switzerlandx, which had reported 15 tonnes of gold from
Togo in 2013 and 7 tonnes in 2014, have not reported any imports from that country since then. In
contrast, Switzerland reported 6 more tonnes of gold imported from Burkina Faso in 2016 than the
quantities exported to Switzerland by the country’s industrial mines. That difference corresponds to
the quantity that Switzerland reported having imported from Togo before publication of the Berne
Declaration report. Apart from this difference concerning Switzerland, Burkinabe export statistics for
2015 and 2014 match the quantities imported by the rest of the world, which seems to lend strength
to the argument that artisanal gold produced in Burkina Faso transits via third countries, especially
(though not only) Togo. 80% of Burkina Faso’s industrially produced gold is refined in Switzerland, the
remainder in South Africa.
The gold produced at the Samira mine in Niger is exported to Switzerland (National Directorate of
Geology and Mines, 2018). Cross-analysis of the statistics shows that the United Arab Emirates
imported 4.3 and 4.8 tonnes of gold from Niger in 2016 and 2015 respectively. For information, the
country is estimated to produce around 12 tonnes of artisanal gold a year.
India, which imported 3.2 tonnes of gold in 2016, as well as 13.2 tonnes from Burkina Faso between
2014 and 2016, is becoming a significant destination for West African gold.
Gold exports to the United Arab Emirates and Lebanon sometimes appear in the three countries’
export statistics, but associated with dollar values that are considerably lower than the market price
(“official values”), generally USD 10-12,000 per kiloxi. For example, Togolese statistics estimate the
value of exported gold at USD 1,700 per kilo (which justifies the imposition of an export tax of about
USD 50 per kilo, equivalent to 3% of USD 1,700). However, the corresponding import declarations
indicate a gold value that corresponds to the international market price.
x
Switzerland is by far the leading importer of gold from Burkina Faso, accounting for 100 out of a total of 123
tonnes officially exported by Burkina Faso between 2014 and 2016.
xi
Niger’s official statistics in 2016 reported a value of barely USD 81 per kilo for gold exported to the United Arab
Emirates (two tonnes).
19Figure 1: Destinations of gold from Burkina Faso, Mali and Niger
Key: The red arrows show the export destinations of the industrial mines operating in the three
countries (Switzerland and South Africa). The blue arrows show the export destinations of ASM gold
(United Arab Emirates, India, Lebanon and Switzerland). The yellow arrows show the traffic in gold
from Burkina Faso and Niger to Togo.
Based on data from UN Comtrade, 2018; interviews, 2018; Alliance for Responsible Mining, 2018; Guéniat and
White, 2015. Initial map: Google Maps.
20Risks within the meaning of Annex II of the OECD Guidance
This section will look at the extent to which the supply chain is exposed to the categories of risk
identified in Annex II of the OECD Guidance, namely:
Serious abuses of human rights associated with the extraction, transport or trade of minerals, such
as child labour (including its worst forms), prostitution and widespread sexual violence, forced labour,
degrading treatment and torture.
Direct or indirect support to non-state armed groups: for example, in cases where such groups control
mine sites or transportation routes or points where minerals are traded, illicitly tax or extort money or
minerals at points of access to mine sites, along transportation routes or at points where minerals are
traded, or illicitly tax or extort intermediaries, export companies or international dealers.
Direct or indirect support to public or private security forces that control, illicitly tax or extort money
at mine sites, along transportation routes or from upstream actors in the supply chain.
Bribery, fraudulent misrepresentation, money laundering and non-payment of tax.
Serious abuses associated with the extraction, transport or trade of minerals
Open conflicts more or less exist in the three countries studied between industrial gold mines,
prospectors and local communities. Prospectors, arguing a presence on gold-mining sites that long
predates the arrival of industrial firms, complain that the establishment of industrial mines on land
they were mining has cut off their sources of income. Local communities feel cheated by the level of
compensation offered for the destruction of agricultural land and the relocation of whole villages.
Working conditions at artisanal mines in the three countries studied are often dangerous, especially
when gold rushes attract thousands of people who settle in the most precarious conditions. This
situation is often at the origin of violent clashes with local communities, who sometimes attack
prospectors to chase them off their land or to settle disputes often relating to theft, encroachment on
farmland or failure to respect moral codes (Bohbot, 2017). This is compounded by conflicts and score-
settling between miners following pit incidents, overlapping claims in galleries operated by rivals,
money issues or theft and accidents linked to the handling of chemicals or explosives
(Nigerdiaspora.net, 2016).
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